A temporal progressive analysis of the social performance of mining firms based on a Malmquist index estimated with a Benefit-of-the-Doubt directional model

Abstract

This study presents an innovative procedure to assess the evolution of the social performance of firms over time using a Benefit-of-the-Doubt Composite indicator specified with a Directional Distance Function and the Malmquist index. In recent years, the social indicators of large corporations are increasingly being used to evaluate corporate performance. Reputation issues associated with the firms’ impact on society, including local employment and contribution to local economic development are considered critical. This paper develops a composite indicator of social performance that can be used both for benchmarking comparisons among firms within an industry and to monitor the evolution of performance over time. Both desirable and undesirable factors can be taken into account in the performance evaluation. An illustrative application involving the assessment of 24 large mining firms in the years 2011 and 2012 is discussed. The specification of indicators reflecting social burdens and benefits of mining firms is based on international standards and guidelines for large corporations. The managerial implications of the results obtained are discussed.